Fannie Mae-No Politics (FNMA)

[LuLeVan]

Hi FOFreddie. Interesting thoughts. I think it could go like this: In the IPO or secondary offering, there will be some large buyers (e.g., Middle Eastern sovereign wealth funds) who will acquire large blocks of shares. This is because there will most likely be a discount of 10% to 20% to fair value. Later, these large buyers will sell some of their shares at a profit.

So index funds and ETF buyers (SPY) are likely to buy the new FNM and FMC shares from the sheiks and other large SPO buyers (Goldman?) who bought the shares cheaply at a premium.

Hi LuLeVan, Something to consider if FNMA and FNMA were ever to come public again is that they would be included in the S&P500 and other capitalization weighted indicies. Normally Index funds and other asset managers end up owning 40% or more of the capitalization of index components...